Insurance: Switching from Hard Sell to Soft Sell

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Monday, August 10, 2020 / 08:58 AM  /By Ekerete Ola Gam-Ikon / Header Image Credit: Fairuz Razak

 

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A closer study of the behaviour of the leading insurers in Nigeria readily reveals good measure of emergent innovative actions and positive responses to the expectations of existing and potential customers. Discerning members of the public would concede that they are beginning to see, hear and feel some sense of insurance even if there are yet lots to be done in the areas of product suitability, transparent communication of policy benefits and basis for swift claims settlement. 

 

Foremost companies in terms of the adoption of digital solutions have already began to acknowledge the advantages evident in costs minimization, heightened policyholders' confidence and renewed attraction of investors' interest despite prevailing economic challenges. Recently, it was very reassuring to learn that the regulator, National Insurance Commission (NAICOM) has been processing applications for Four (4) fresh operating licences, considering that in the last 25 years, it had only issued Two (2) such fresh licences!

 

If these new behaviours could be attributed to the impact of COVID-19, who can say how much longer we will wait to experience such positives regarding the regulatory environment and structure of the insurance industry in Nigeria.

 

If you had not received an Insurance Agent in your office, or even on phone, you might not understand the difference between then and now when you can calmly navigate an app then effectively decide what suits you rather than the pocket of such agents. The fear of competition from another agent or broker often created those pressure points that justified the hard sell tag on insurance.

 

Where Can We Expect Any Switch?

In a number of ways and workings we expect necessary switches, however with respect to regulation, the NAICOM helmsman has already stated that the Commission will need the Consolidated Amendment Bill to be passed, if the ideas and concepts we have for transforming the insurance industry would be adopted and implemented. So, do we just wait? Of course, not!

 

For example, we expect to see a better relationship between the regulator and investors/shareholders. In the insurance industry in Nigeria, the regulator, in line with the law, recognizes and relates with the Chief Executive Officers, who are quite often, mostly influenced by their investors (money-bags). Sometimes, until conflicts arise between the Board and Management, and may be the CEO decides to petition the regulator before that intervention comes.

 

With digitisation, we expect the reportage to be more transparent and NAICOM can act earlier on signs of mismanagement to protect the position of the policyholders. Beyond this, it might be necessary for the regulator to engage the Directors of insurance companies, as it had done years ago, with a view to strengthening corporate governance practices in the insurance industry.

 

The challenges arising from business leaders, investors and private equity firms, some largely successful in other sectors, directing insurance professionals on how to run the highly regulated insurance business continue as the hard sell given the slow adoption of technology with regard to this investor-manager relationship.

 

Only very few companies that are led by professionals-turned business persons have successfully managed what would have been conflicts, as exist in other companies.

 

In the context of hard sell, another structural area we need to see some shift is from corporate policyholders to individual policyholders, again using digital solutions as instruments of soft selling.

 

This has been so over the years, but in my view, more recently has been encouraged by the laws requiring companies and employers to have insurance coverages for their employees. Group Life, for instance, has become the attraction for investors in the sector because the Pension Reforms Act 2004 and (Amendment) Act 2014 have stipulated it as a requirement for any company with four or more employees.

 

Enforcing the Soft Sell

An even more important structure that needs to be urgently examined using digital solutions has to do with the relationship between insurance companies and brokers, then the relationship between insurance practitioners (underwriters, brokers, loss adjusters, agents, actuaries) and policyholders. The structure should be made easier for the policyholder (customer) to connect with, and thankfully technology can enable this.

 

We should look forward to significant improvements in the experiences of policyholders and investors, while more young tech savvy are attracted and retained by the industry.

 

Overall, insurance is becoming a soft sell because digitisation is not just a fad but the greatest opportunity of the insurance industry to leapfrog to its rightful position as the quiet safety net of economic actors in Nigeria.

 

The time has come to win, with empathy, compassion and emotional intelligence.

 

About The Author

Ekerete Olawoye Gam-Ikon, MNIM, CPP, is a management consultant with a specialization in Strategy and Insurance. You can contact him via e:mail olagamola@gmail.com and mobile +234-806-648-1111


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